OldNavySailor

The GMAC Game of Chicken

Today I sold three GMAC bonds out of my retirement portfolio that will mature next year (2009). I took a loss of .50 cents on the dollar but it will be much worse when GMAC goes bankrupt.

GMAC is not offering to buy the debt of all bondholders, just selected European and U.S. bonds based on interest rate and maturity date. I think this is a mistake if they want to raise cash quickly. They should open up the offer to all holders of their debt via a Dutch Auction process.

The decision to sell was based on my opinion that no "white knight consortium" will come to GMAC's rescue: not the parent company Cerberus, not bondholders, not investors, certainly not GM and not the government. They have too much debt caused by poor business dealings.

Note - I bought a 2006 Chevrolet Impala new with GMAC 0% financing. Maybe that's one of the reasons why GMAC is going bankrupt!